The recent budget agreement also avoids the threat of automatic reductions in sequestration spending that would have taken place at the beginning of the new fiscal year, under the 2011 Budget Control Act. Under current legislation, there is no cap on defence and non-defence spending for fiscal year 2022 and beyond. While this means that there is no longer a statutory limit on spending, the BCA`s budget caps have not served as a ceiling in practice. On the contrary, the budget ceilings served as the basis for the budget and the basis from which the transactions were negotiated. In each year when the budget ceilings were in effect, budget ceilings were raised above their original level and the budget never fell below the original level of budget ceilings. And the dichotomy, that there were separate defence and non-defence ceilings, created leverage for both sides in the debate to reach a compromise between the parties. The de facto practice that followed the adoption of the BCA was a two-year budgeting process that manifested itself, albeit slowly and with many problems, in the 2013 BBA, BBA 2015, BBA 2018 and BBA 2019 budget agreements. The agreement also contains approximately $77 billion in compensation that is expected to come into force by the end of the decade and is unlikely to be in effect. In the absence of congressional action, the statutory discretionary funding caps will impose an 11 percent reduction in defence and a 9% reduction in non-defence (NDD) programs by 2020 compared to the amounts allocated in 2019. Such deep cuts would have devastating effects on national security and the economic vitality of the United States. The budget agreement replaces these destructive cuts with a realistic fiscal framework to allow Congress, through its annual budget projects, to invest critically in our country`s infrastructure and people.
The two-year budget agreement, signed by the president on Friday afternoon, provides a slight sense of security for federal officials and their agencies and sets spending figures for 2020 and 2021. The impact of this difference on the annual fundraising process, which allocates these funds among federal programs, is expected to be mixed. On the one hand, it is often easier to reach agreement on the underlying expense accounts when larger increases are required. But as experience has shown last year, a budget agreement to begin the budget cycle – as Congress will do next year – can help the House of Representatives and the Senate complete their work in a timely manner.